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Economic Outlook

Why I’m not worried about China and Asia

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Posted by Larry Edelson - Money & Markets

on Wednesday, 15 February 2017 06:45

Screen Shot 2017-02-15 at 6.27.45 AMIf you only read the headlines, it’s easy to believe a trade war could be looming with China and Asia.

In fact, if you believe the rhetoric, you’d take a second look before investing a dime of your hard-earned money in anything related to the region.

But it’s just rhetoric – and misleading rhetoric to boot. Here’s what is really happening …

The Trans-Pacific Partnership (TPP) was set to be the largest regional trade accord in history.

The TPP would have set new terms for trade and business investment among the United States and 11 other Pacific Rim nations: A wide-ranging group with an annual gross domestic product of nearly $28 trillion, representing roughly 40 percent of global GDP and one-third of world trade.

President Trump didn’t like the deal and thinks a more U.S. friendly deal can be made. So his administration is pushing for bilateral trade agreements between these each of these nations in the future.

In other words, getting rid of TPP wasn’t the end of trade negotiations, it was the beginning. There’s going to be a ton of deals coming down the pike.

And a lot of trade talk in China and Asia is going to go that way: Rhetoric and Trump posturing to begin with, deal making in the end.

Then, there’s tax reform and the possibility of President Trump’s administration implementing a border-adjustment tax. 



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Economic Outlook

Hoisington Quarterly Review and Outlook -- 4Q2016

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Posted by John Mauldin - Outside The Boxn - Outside The Box

on Thursday, 09 February 2017 06:20

LookoutboyLongtime readers of Outside the Box know that I am a fan of Dr. Lacy Hunt of Hoisington Investment Management. Lacy and his partner, Van Hoisington, produce a quarterly letter that is a must-read for me, as it reliably informs my thinking in a world drowning in conventional economics – economics that seem to continually miss the mark.

It almost goes without saying that Lacy will be speaking at our Strategic Investment Conference again this year, and he’s just one of a long (and still-lengthening) list of top-flight speakers. Learn more and reserve your chair, right here.

Today’s OTB is one of the most important pieces Van and Lacy have written in a long time. They establish that the proposed tax reforms will face enormous headwinds that were not there during previous tax-reform eras, which means that the benefits that Republicans think will accrue are likely to take longer to appear and be less than expected, which will mean that it is going to take more than what is presently proposed to jump-start the economy.

A few readers have asked me whether I am still a deficit hawk. The answer is, “Yes, more than ever,” because total debt has now rendered both monetary and fiscal policy much less effective. Debt, as Lacy and Van clearly show, is an impediment to growth.

There are other issues impeding growth, such as the ten million men between ages 24-64 who are not in the work force, a condition that has been steadily worsening for 40 years. It’s not just a recent phenomenon, but it must be addressed. These are men who have chosen to not participate for one reason or another and are perforce a drain on overall GDP growth.

And let’s not forget that for the last nine years we have seen more businesses close than be created, which has certainly affected GDP.



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Economic Outlook

Consumer Confidence Highest in 12 Years

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Posted by Financial Sense

on Tuesday, 31 January 2017 08:39

The University of Michigan Final Consumer Sentiment for January came in at 98.5, up from the December Final reading. Investing.com had forecast 98.1.

Surveys of Consumers chief economist, Richard Curtin, makes the following comments:

Consumers expressed a higher level of confidence January than any other time in the last dozen years. The post-election surge in confidence was driven by a more optimistic outlook for the economy and job growth during the year ahead as well as more favorable economic prospects over the next five years. Consumers also reported much more positive assessments of their current financial situation due to gains in both incomes and household wealth, and anticipated the most positive outlook for their personal finances in more than a decade. Consumers have become more convinced that the stronger economy would finally prompt the Fed to increase interest rates at a quicker pace, which caused one-in-five consumers to favor borrowing-in-advance of anticipated increases in mortgage rates, the highest level in more than twenty years. Overall, the post-election surge in consumer confidence was based on political promises, and not, as yet, on economic outcomes. Moreover, over the past half century the surveys have never recorded as dominant an impact of partisanship on economic expectations. When the same consumers were re-interviewed from six months ago, the survey recorded extreme swings based on political party affiliation, with Democrats becoming much more pessimistic and Republicans much more optimistic. Such divergences will ultimately converge since consumers hold economic expectations to be useful decision guides, which will require both sides to temper their extreme views. [More...]

See the chart below for a long-term perspective on this widely watched indicator. Recessions and real GDP are included to help us evaluate the correlation between the Michigan Consumer Sentiment Index and the broader economy.

michigan-consumer-sentiment

 

...read more from FinancialSense.com HERE

...also:

Looking for Yield, Ozzie's Got Some Ideas



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Economic Outlook

The End of Big Government?

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Posted by Larry Edelson - Money & Markets

on Wednesday, 25 January 2017 08:21

On President Trump’s first day in the Oval Office, he made good on his campaign promise to “rip up” trade deals he thinks are unfavorable to the U.S. economy by withdrawing from the Trans-Pacific Partnership trade negotiations.

And mark my words, this is only the beginning.

Not long after Trump’s election win – a surprise to most investors, but an outcome I predicted in advance thanks to my cycle analysis – I’m on record saying: “I have no doubt that he will follow through on this promise. He was clear about one goal throughout his campaign: Getting much tougher on trade relations.”

My cycles and AI models warned you to expect chaos in the global economy and financial markets, including a worldwide sovereign bond crisis. This was long before Mr. Trump even decided to run for president.

Screen Shot 2017-01-25 at 7.06.47 AMThe truth is, we were heading down this path no matter who became our next Commander in Chief. But the fact that Donald J. Trump is our 45thpresident at this critical time in our nation’s history, indeed in the annals of world history, fits in perfectly with my cycle analysis.

Look, this is the guy who authored “The Art of the Deal” and “The Art of the Comeback.” So make no mistake, he fully intends to use the same hard-ball negotiating tactics when it comes to a broad range of issues including:

 

  • Foreign trade talks…
  • Confronting China …
  • Levying tariffs and taxes on imports …
  • Even combating Isis and terrorism in general

 

As I said, this is just the beginning. Going forward, expect more divisive politics and social unrest that will make the million-women march look like a tea party. Ultimately, you can expect an end to the era of big government, not just in the U.S., but worldwide.

The old order that has been in place since WWII is about to come crashing down. The era in which governments amassed an unsustainable $275 trillion in total debts and obligations is quickly coming to a painful end.

Best wishes,

Larry



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Economic Outlook

Dr. Judith Curry Quits University Over The State of Climate Science

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Posted by Robert Zurrer - Money Talks Editor

on Saturday, 07 January 2017 22:35

2521 earth20161122-768px-80To broaden the debate given the number of disagreements posted on Facebook since the article posted on this site January 4th titled "Peer-Reviewed Survey Finds Majority Of Scientists Skeptical Of Global Warming Crisis", I am sending links to three articles below, 1 for, one against, and one fascinating youtube by a scientist that illustrates the amount of Carbon Dioxide in the atmosphere (.038%):

Against: Tucker Carlson Interviews Scientist Who QUIT HER UNIVERSITY Over Left Wing Climate Change Activism (VIDEO)

For: From NASA - Study sheds new insights into global warming trends (2016)

Factual information on Carbon Dioxide in the Atmosphere: Carbon Dioxide in perspective by The Galileo Movement

Robert Zurrer

Editor

Moneytalks.net

Late addition: As Donald Trump Denies Climate Change, These Kids Die of It

 

 

 



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Economic Outlook

Peer-Reviewed Survey Finds Majority Of Scientists Skeptical Of Global Warming Crisis

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Posted by Forbes

on Tuesday, 03 January 2017 06:55

300px-Global warming ubx.svg 1It is becoming clear that not only do many scientists dispute the asserted global warming crisis, but these skeptical scientists may indeed form a scientific consensus.

Don’t look now, but maybe a scientific consensus exists concerning global warming after all. Only 36 percent of geoscientists and engineers believe that humans are creating a global warming crisis, according to a survey reported in the peer-reviewed Organization Studies. By contrast, a strong majority of the 1,077 respondents believe that nature is the primary cause of recent global warming and/or that future global warming will not be a very serious problem.

...continue reading HERE



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Economic Outlook

Bush Trumps Reagan

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Posted by Peter Schiff - Euro Pacific Capital

on Friday, 23 December 2016 09:10

UnknownThe optimism that has followed the election of Donald Trump has pushed the Dow Jones Industrial Average to the threshold of 20,000, a level that will be both a nominal record and a symbolic milestone. Although this is not the way most observers had predicted that 2016 would play out, most on Wall Street have become extremely reluctant to look a gift horse in the mouth...or to even look at him at all. The impulse is to jump on and ride, and only ask questions if it pulls up lame. But if this year has proven one thing, it is that predictions made by the consensus should not be trusted.

Back in the earlier part of 2016 the mood was decidedly darker. At that point most people believed that the Federal Reserve would be raising rates throughout the course of the year. While such hikes had been anticipated (and delayed) for years, most took comfort in the belief that the economy would be expanding nicely by the time the Fed actually pulled the trigger. But in late 2015, the already tepid GDP growth seen in the prior two years seemed to be decelerating. Investors also concluded that Hilary Clinton was a lock to win the election, thereby assuring that the anti-growth policies of the Obama years would continue. Many looked at these developments and concluded that the sins of the past decade, in which the Government and the Federal Reserve had used unprecedented levels of fiscal and monetary stimulus to prop up the economy and the stock market, had finally caught up with us. As a result, the Dow Jones shed more than seven per cent in the first two weeks of the year, its worst start on record.

But the year comes to an end amid a cloud of Trump-fueled bullishness. The markets fully embrace an unapologetic capitalist, and his team of billionaires, who promises to cut taxes, rewrite trade deals in America's favor, take a machete to anti-growth regulations, repeal Obamacare, and return America to its former industrial might. Many are making parallels to the Reagan Revolution in which a maverick anti-establishment Republican took charge in Washington and ignited an economic boom, a stock market rally and a surge in the dollar. But to make this comparison, boosters must jump over a more telling comparison to the last Republican president elected, George W. Bush.



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